Corey Rosen, Executive Director of the National Center for Employee Ownership and U.S. Representative Maurice D. Hinchey (D-New York) contended in comment letters posted to the DoL Web site that such a rule change would hurt ESOP plans and those who provide them. Rosen complained that the proposal would hold down the number of ESOPs being started because of additional costs arising from the new need for fiduciary insurance and would ultimately lead to fewer qualified appraisers because some would drop out of the business.
“Fiduciaries can be held liable for their yearly valuation of ESOP stock and, as a result, services by fiduciaries would add considerable additional costs to these businesses,” said Hinchey, in his letter. “Subjecting businesses with ESOPs to an additional financial burden will likely result in fewer businesses opting into employee stock ownership plans in the future and may even result in businesses shedding their current employee stock ownership plan.”
Rather than add fiduciary status to ESOP appraisers, Rosen suggested the DoL issue regulations governing ESOP valuations, better define the current requirement that appraisers be “independent,” and mandate the appraisers be credentialed by a professional appraiser organization.
“Impose new regulations on all ESOPs needlessly hurts the good actor and reduces the corresponding retirement of its employees,” Hinchey declared. “I strongly urge the Department of Labor to allow the good actors to maintain the current requirements regarding ESOP stock valuation. For the last 34 years, this program has successfully provided retirement benefits for millions of Americans and should be free to do so into the future.”
The Rosen letter is at http://www.dol.gov/ebsa/pdf/1210-AB32-013.pdf.
The Hinchey letter is at http://www.dol.gov/ebsa/pdf/1210-AB32-026.pdf.